More pressure on Atlas hold-outs to take Hancock offer

The board of Atlas Iron has heaped further pressure on shareholders opposed to Gina Rinehart’s takeover, yesterday releasing an independent expert’s report that backed the deal while saying its own review had found no viable alternative.

BDO concluded in its independent report that the 4.2¢-a-share offer from Mrs Rinehart’s Hancock Prospecting was well above Atlas’ fair value, which was put between 1.5¢ and 4¢ a share.

BDO said the Hancock offer, made through subsidiary Redstone, provided certainty and was above Atlas’ last traded price of 1.9¢ before the announcement of an original offer from Mineral Resources.

In a letter to shareholders, Atlas chairman Eugene Davis noted the Hancock offer was not subject to any regulatory approvals, financing, due diligence or minimum acceptance conditions.

“Over the past 18 months, the Atlas leadership team has worked diligently to improve the Atlas business,” Mr Davis said.

“The fruits of this work have been seen in the improvements we have made to our iron ore business, including the achievement of a better quality product, as well as in our early-stage diversification initiatives in lithium and manganese.

“However, the widening discounts being applied to lower-grade iron ore has largely offset these improvements to our underlying business, resulting in our operations running at a loss as outlined in our March and June 2018 quarterly activities reports.

“Atlas has also conducted a detailed strategic review with the assistance of independent advisers.

“Following that review and given ongoing difficult market conditions for low grade iron ore, we believe that the Hancock offer is in the best interests of Atlas shareholders in the absence of a superior proposal.”

Atlas’ board drove home the importance of sealing a deal with news the company made a statutory net loss of $21 million in the six months to December.

The company stressed it was anticipating worse trading conditions as costs of production continued to outpace revenue from its low-grade ore.